In every business relationship there is the potential for conflict over contractual agreements or business operations. When such conflicts arise, there is no need to incur the onerous expense and delays involved in traditional litigation. There are readily available alternative dispute resolution procedures that will enable you to resolve your disputes relatively quickly, fairly and cost-effectively.

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Federal Case Update| Mail and Carrier

Court Dashes Postmaster General’s Hopes That New Argument to Avoid Administrative Arbitration, Not Raised Below, Is Unwaivable Because It Goes to Subject-Matter Jurisdiction Ruiz v. Donahoe 2015 WL 1811810 United States Court of Appeals, Fifth Circuit

Blanca Ruiz worked for the post office. She sued Postmaster General Donahoe in a putative class action. The district court dismissed the case for lack of subject matter jurisdiction, but the United States Court of Appeals for the Fifth Circuit reversed and remanded the case for a determination regarding an administrative class action.

Donahue petitioned for rehearing, arguing that the CBA covering Ruiz’ employment bars litigation of her claims. He argued that despite the fact that he is raising this matter for the first time on the petition, he did not waive the argument because the matter goes to subject-matter jurisdiction.

The Court disagreed. It wrote “[M]andatory grievance and arbitration procedures in contracts, such as the CBA [in prior cases] are waivable and do not affect this court’s subject-matter jurisdiction. If a dispute is subject to mandatory grievance and arbitration procedures, then the proper course of action is usually to stay the proceedings pending arbitration. However, a dismissal may be appropriate ‘when all of the issues raised in the district court must be submitted to arbitration.’ In any event, agreements to arbitrate implicate forum selection and claims-processing rules not subject-matter jurisdiction….Donahoe has waived his argument regarding the CBA’s mandatory grievance and arbitration procedures by failing to raise it before the district court or this court prior to the present petition for rehearing.”

Lito Asignacion sustained injuries while working aboard a vessel operated by Rickmers Genoa Schiffahrtsgesellschaft MBH (Rickmers). The injury occurred in Louisiana and he filed suit in court there. Rickmers moved to compel arbitration.

Asignacion’s employment was governed by terms and conditions, which included the following:

“In cases of claims and disputes arising from this employment, the parties covered by a collective bargaining agreement shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If the parties are not covered by a collective bargaining agreement, the parties may at their option submit the claim or dispute to either the original and exclusive jurisdiction of the National Labor Relations Commission (NLRC), pursuant to Republic Act of 1995 or to the original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators….Any unresolved dispute, claim or grievance arising out of or in connection with this Contract, including the annexes thereof, shall be governed by the laws of the Republic of the Philippines, international conventions, treaties and covenants where the Philippines is a signatory.”

The state court stayed the matter and ordered arbitration in the Phillipines. The panel determined that it could use only Phillipine law to determine the dispute, and it awarded the lowest grade of compensable disability, entitling Asignacion to $1,870.

Asignacion filed a motion to set the award aside as a violation of United States public policy. Asignacion pointed to Article V(2)(b) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which “allows a signatory country to refuse enforcement if recognition or enforcement of the award would be contrary to the public policy of that country.” The district court refused to enforce the award and Rickmers appealed.

The United States Court of Appeals for the Fifth Circuit noted that the burden of proof was on Asignacion. The Court rehearsed his main argument. “Asignacion’s counsel also urged that United States public policy requires that foreign arbitral panels give seamen an adequate choice-of-law determination; he argued that the arbitrators’ exclusive reliance on the choice-of-law provision in Asignacion’s contract did not constitute a choice-of-law determination, let alone a fair one.”

The Court was unpersuaded, and it reversed. Noting that the law does not require that U.S. courts apply U.S. standards to all foreign awards, it found that the court below had gone a step too far. “[T]he district court only determined that the arbitration and award ‘effective[ly] deni[ed]’ Asignacion the right to pursue his general maritime remedies. But that finding is insufficient to support the conclusion that the public policy of the United States requires refusing to enforce the award.”

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The JAMS ADR blog serves to engage our clients, the legal community and the public in a discussion about alternative dispute resolution. As leaders in mediation, arbitration and more, we strive to remain at the forefront of legal developments, trends and news in areas of law that pertain to ADR.

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